Way back on February 6, EUR/JPY was at 120.60 and we was lookin’ to go long and then bail out and switch to a short when the pair does get to 121.70. Unfortunately, the pair only got to 121.30 before turning lower, which is a real bummer. Anyhow, congratulations to those of ya who were quick enough to dump your longs and go short when the pair started to find sellers at 121.30. You deserve the 70 pips you got from your long position and your subsequent 260 pips from your shorts.
For today’s play, we’ve got the updated chart of our channel plus a Fibonacci play going on. As y’all can see, the pair has reached the major area of interest at 118.60. And it just so happens that 118.60 lines up with the channel’s support area. Moreover, stochastic is already indicating oversold conditions and all that. As such, we’re expecting a pullback to happen. But if we apply our Fibonacci tool, however, we can see that all three retracement levels line up with valid price areas of interest. Although 61.8% retracement level seems to be the most important, since it lines up with the very significant price level at 120.30. There is therefore a chance that the pair may not reach the channel’s resistance area.
Anyhow, another play here is to go long on the pair. Do note, however, that goin’ long here is a counter-trend play and extra risky. More conservative forex traders may therefore wanna sit this one out for a while until the pair does reach the channel’s resistance area or resistance forms at one of the Fibonacci retracement levels.
That there is the updated descending channel for EUR/AUD that we first found on February 15. Back then, we actually drew the channel differently. And back then, I also told y’all to be ready to bail or switch directional bias if the pair blows right past 1.3850. Well, as y’all can see, 1.3850 held as resistance, so we took that into account and redrew the channel. By the way, give yo self a pat on the back for your 200+ pips if you decided to short when 1.3850 held as resistance.
Anyhow, a chance to go short again may soon present itself, since the pair is already getting buyers. In addition, stochastic is already pointing up and moving away from oversold territory. These could mean that them bulls are back in control. And if the pair does move higher, then bulls will likely try gunning for the area of interest at 1.3750, which happens to be roughly where the channel’s resistance area is at. You may wanna consider bailing if them bulls try to gun for 1.3850 instead. Also, if them bulls successfully break past 1.3850, then you may even wanna consider switching bias. Anyhow, just remember to practice proper risk management, a’ight?
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.